Pensions Act 2004 Explanatory Notes

833.Subsection (1) of this section imposes a requirement on the trustees or managers of a scheme to obtain the agreement of the employer: to any decision about the methods and assumptions which are to be used by the actuary in calculating the scheme’s technical provisions; to any matter which is to be included in the scheme’s statement of funding principles; to any recovery plan; and to any matter to be included in the schedule of contributions.

834.Subsection (2) applies where the trustees or managers of a scheme conclude that they will not be able to obtain the employer’s agreement (within prescribed time limits) to any of these matters. In these circumstances this section confers a power on the trustees or managers (if the employer agrees) to modify the future accrual of benefits under the scheme in order to obtain the employer’s agreement.

835.Subsection (3) prohibits any modification under subsection (2) that would adversely affect the subsisting rights of any scheme member or their survivor. For the purposes of this legislation the definition of “subsisting right” and “survivor” is given in Section 67A of the Pensions Act 1995.

836.Subsection (4) requires the trustees or managers to record any such modification in writing, and to notify active scheme members (that is, those who will be affected by the change) within one month of the modification taking effect.

837.Subsection (5) imposes a requirement on the trustees or managers to report a failure to reach agreement with the employer on any of the matters set out in subsection (1) to the Regulator, in writing, within a reasonable period.

838.Subsection (6) provides for civil penalties to apply to a trustee or manager who fails to take all reasonable steps to comply.